Rio Tinto faces FCA investigation into $ 6.75 billion Mongolian mine

The UK’s monetary watchdog is conducting an investigation into Rio Tinto and its $ 6.75 billion underground copper challenge in Mongolia’s Gobi Desert.

The Monetary Conduct Authority is investigating whether or not the Anglo-Australian firm violated itemizing guidelines in disclosures concerning the worth of Oyu Tolgoi in 2018 and 2019, in response to folks conversant in the state of affairs.

Rio introduced in July 2019 that the Oyu Tolgoi underground enlargement would require extra capital of $ 1.2 billion to $ 1.9 billion and would have a delay of 16 to 30 months. He stated the tough terrain situations meant he must rethink the challenge’s design and growth schedule.

Nevertheless, some buyers and a former worker claimed that Rio knew the copper mine enlargement was in hassle months earlier than the problems had been disclosed to buyers.

On the time the delays had been introduced, Rio’s chief government was Jean-Sébastien Jacques, who resigned final yr after backlash from buyers over the destruction of two former Aboriginal rock shelters in Australia.

Rio declined to remark. It had beforehand stated that it had “persistently fulfilled” its disclosure obligations in relation to the underground growth at Oyu Tolgoi.

The FCA stated it “couldn’t touch upon particular person firms.”

The FCA investigation provides to the corporate’s $ 140 billion authorized issues. The UK Critical Fraud Workplace launched an investigation in 2017 right into a cost made by Rio to a guide working at a controversial iron ore deposit in Guinea.

Rio has additionally been accused of fraud by US monetary regulators. fined £ 27 million by the FCA for inflating the worth of coal property in Mozambique.

You possibly can face one other high-quality you probably have violated the FCA disclosure guidelines on Oyu Tolgoi.

The challenge is considered one of Rio’s most necessary development property. As soon as the underground enlargement is full, it will likely be among the many largest copper mines on this planet, able to producing almost 500,000 tonnes of the metallic yearly.

Oyu Tolgoi’s scheme has been plagued with issues and disagreements with Ulan Bator. The primary manufacturing on the mine is predicted in October 2022.

Rio has blamed difficult floor situations and “geotechnical” issues for many of the setbacks in underground growth. Nevertheless, his explanations have been challenged in a US court docket by US hedge fund Pentwater Capital Administration.

In paperwork filed this yr as a part of a category motion lawsuit, PCM claimed that senior executives at Rio and its Toronto-listed subsidiary Turquoise Hill Sources (TRQ) knew the enlargement was in hassle months earlier than the problems had been revealed. to buyers.

He additionally stated the delay and value overruns had been largely the results of poor “engineering, procurement and development” by Rio and different contractors on vital mining wells.

Rio seeks to have that case dismissed. He beforehand stated the lawsuit was “unfounded.”

The FCA investigation comes as an impartial consulting group is able to publish the outcomes of a evaluation on the fee overruns and delays at Oyu Tolgoi.

The evaluation was requested by the Mongolian authorities, which owns 34 p.c of the challenge. The remaining 66 p.c is owned by TRQ. Its share value has greater than halved for the reason that excesses had been introduced.

“We anticipate receiving a last report of the continuing impartial evaluation on value overruns and schedule delays for the Oyu Tolgoi underground enlargement in early August,” the Mongolian authorities stated in a press release.

“We hope that the ultimate report will make clear many points associated to the challenge and varied allegations and supply a extra clear and complete view of what has occurred to the challenge in recent times.”

Rio experiences its outcomes on Wednesday and is predicted to announce the very best half-year earnings in its historical past because of booming costs for iron ore, its fundamental commodity.

Further reporting by Kate Beioley | Rio Tinto faces FCA investigation into $ 6.75 billion Mongolian mine


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